Hertz Ditching Tens of Thousands of EVs - Here Is What The Company Said In Its Own Words

Torque News, including your author, enthusiastically reported rental car giant Hertz’s move to rental cars over the past few years. You can read our prior reporting on the subject here and here. 

Related Story: Automakers Desperate to Move Unwanted EVs Amp Up Discounts - Yes, Even Tesla

Our quoting of Hertz's comments going forward is taken directly from the company’s 8-K SEC filing today. Noplace in this story does Torque News offer an opinion. We will let the readers make their own judgements about what Hertz's decision to ditch tens of thousands of EVs after giving them a chance means in the broader sense of Ev adoption. 

Hertz is ditching 20,000 EVs:
“Hertz … has made the strategic decision to sell approximately 20,000 electric vehicles (“EVs”) from its U.S. fleet, or about one-third of the global EV fleet.”

Hertz will buy lower cost of ownership ICE cars with the proceeds:
“The Company expects to reinvest a portion of the proceeds from the sale of EVs into the purchase of internal combustion engine (“ICE”) vehicles to meet customer demand.”

Hertz has found that electric vehicles are less profitable and come with a higher cost of operation:
 “This will position the Company to eliminate a disproportionate number of lower margin rentals and reduce damage expense associated with EVs.”

Hertz says ditching EVs will make it more profitable: 
“It is expected that the planned reduction in the EV fleet and reinvestment in additional ICE vehicles will improve Adjusted Corporate EBITDA across 2024, as vehicles are rotated, and in 2025, by which time all of the vehicles included in this plan are expected to be sold. By year end 2025, it is expected that the aggregate two-year benefit to Adjusted Corporate EBITDA related to the sale will approximate the incremental net depreciation expense to be recognized in the fourth quarter of 2023. It is expected that this benefit to the Company’s financial results will be derived from higher revenue per day and lower depreciation and operating expenses related to its remaining fleet. The Company further anticipates that incremental free cash flow generation related to this action will approximate $250 million to $300 million in the aggregate over 2024 and 2025.”

Hertz found that EVs lost their value faster than predicted:
“...residual values for (electric) vehicles generally fell throughout the quarter greater than previously expected.”

Hertz specifically mentioned that its electric vehicles had higher repair costs than its ICE vehicles in the fleet:
“expenses related to collision and damage, primarily associated with EVs, remained high in the quarter, thereby supporting the Company’s decision to initiate the material reduction in the EV fleet.”

Hertz has offered many comments to assure EVangelist investors that the company has not entirely quit on EVs. However, in its summary of what might cause Hertz to adjust its plans, Hertz said factors include:
“...its ability to implement plans to support a large-scale EV fleet, execute its rideshare strategy and to play a central role in the modern mobility ecosystem;
•uncertainty with respect to the economics of EVs, including those driven by customer demand, pricing, maintenance, incidence rate and cost of collision and damages, and residual value volatility.”

You can view the Hertz 8-K SEC filing at this link. 

The image used in the story was provided by the Hertz company's media resources page. Hertz credits E.R. Davidson with having taken the image. 

John Goreham is an experienced New England Motor Press Association member and expert vehicle tester. John completed an engineering program with a focus on electric vehicles, followed by two decades of work in high-tech, biopharma, and the automotive supply chain before becoming a news contributor. In addition to his eleven years of work at Torque News, John has published thousands of articles and reviews at American news outlets. He is known for offering unfiltered opinions on vehicle topics. You can follow John on Twitter, and connect with him at Linkedin.